Senate Panel Advances Yellen’s Bid to Lead Federal Reserve
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WASHINGTON — A Senate panel on Thursday advanced Janet Yellen’s nomination to lead the Federal Reserve, setting up a final vote in the full Senate after lawmakers return from a two-week Thanksgiving break.
The Senate Banking Committee approved her nomination on a 14-8 vote. Sen. Joe Manchin, D-V.Wa., was the only Democrat to oppose Yellen’s nomination. Republican Sens. Bob Corker of Tennessee, Tom Coburn of Oklahoma and Mark Kirk of Illinois supported her.
Yellen’s path to confirmation also became easier on Thursday when the full Senate voted to change its rules for approving all presidential nominees other than Supreme Court selections. Now a simple majority will be required, instead of 60 votes.
Republicans could still try to delay the final vote to focus attention on other issues. For example, Sen. Lindsey Graham has threatened to hold up nominations for government positions until survivors of last year’s deadly attack on the diplomatic post in Libya appear before Congress.
But Democrats control 55 votes in the chamber, so such tactics could easily be overcome.
Yellen was nominated by President Barack Obama in October to succeed Ben Bernanke, whose second four-year term as chairman will end Jan. 31.
She would be the first woman to lead the Fed and the first Democrat to do so since Paul Volcker stepped down in 1987. She made clear at the committee’s hearing last week that she’s prepared to support the Fed’s extraordinary efforts to bolster the economy until there are clear signs of a sustained rebound and further improvement in the job market.
As a result, the Fed’s low-rate policies are expected to continue under her leadership. Yellen has been a close Bernanke ally, first as president of the San Francisco regional Fed bank, and then since 2010 as vice chair of the Fed’s board in Washington.
Yellen and Bernanke are both considered “doves” — Fed officials who stress the need to fight unemployment during periods of economic weakness. By contrast, “hawks” tend to worry more about inflation that could arise from the Fed’s policymaking.
In the view of Fed watchers, Yellen’s testimony last week solidified her dovish reputation. She maintained that the Fed’s bond buying program has successfully supported the economy by keeping long-term borrowing rates. And she minimized concerns that critics have raised about the bond purchases.
The Fed is adding to its investment portfolio with $85 billion a month in bond purchases. Its holdings are nearing $4 trillion, more than four times their level before the financial crisis struck in the fall of 2008.
Republican critics say they fear that by flooding the financial system with money, the Fed has inflated stock and real estate prices and could create asset bubbles that could pop with dangerous consequences for the economy.
Some say they also worry that the Fed’s eventual unwinding of its investment holdings will unsettle financial markets, sending stock prices falling and interest rates rising and threatening the economic recovery.
Sen. Mike Crapo, R-Idaho, said before Thursday’s vote that he would oppose her because of his disapproval of the Fed’s easy money policies.
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